Indian tea startups like Teabox, Teamonk are building brands globally

These startups see most of the demand, around 75%, coming from the US, Russia and the UK.Anand J | TNN | December 01, 2016, 09:47 IST

In late 2014, Kaushal Dugar, founder of online tea selling platform Teabox, received an email from 68-year-old Robert Bass, founder of the celebrated New York-based private equity fund Oak Hill Capital.

Bass was a connoisseur of tea and spent about an hour over the course of every single day sipping his favourite beverage. Bass had one day come across Teabox and had started ordering. Six months into it, he sent an email to Dugar saying if Dugar ever needed cash, he could reach out to him. Three months later, Bass participated, in his individual capacity, in Teabox's first round of institutional funding.

“When you have consumers putting in money, you know that you are doing something right,” says Dugar, adding, “Bass was happy to see that innovations were happening in traditional industries too.”

Online tea startups are creating Indian tea brands in markets like the US and Russia; something even the big tea estates and business houses have failed to do in the last century of the country's history as a major tea producer. Teabox, Teamonk, Vahdam Teas and Teameteas sell several specialty teas and single origin teas from the famed tea gardens of Darjeeling and the Nilgiris.

These startups see most of the demand, around 75%, coming from the US, Russia and the UK. “There was no Indian brand in the global tea market whereas there are 50 niche brands from Sri Lanka. That’s changing,” says Bala Sarda, founder of Vahdam Teas, which has different websites for the Indian market, for the Russian market, and for the rest of the world to address the different tastes in these markets.

A 100gm tea leaves box starts at about Rs 350 and can up to more than Rs 12,000. The startups are investing in facilities that help them to create different blends. Teamonk has launched pyramidical tea bags that leave enough space for the dried leaves to expand when immersed in hot water. Teabox last month launched tea bags filled with inert gas nitrogen that preserves the freshness and flavour of the tea leaves. Vahdam has invested in logistics so that the company can ship its products to New York in four days.

Teabox, which has raised $9 million in funding from Accel Partners, Jafco Asia and Horizen Ventures, has 100 employees, and says it has seen a three-times growth in volumes in the past one year. The platform has 1.5 lakh registered users, and has an average transaction value of $80. Dugar says that the specialty tea market is 1% of the overall tea business with lot of headroom for growth.

Ashok Mittal, MD of Bengaluru-based Teamonk, says even the Indian market has grown big in the past couple of years. “People are getting health conscious. A few lakh customers will be a large enough market. We are also targeting big hotel chains and pushing our products for corporate gifting,” he says.

Most of these ventures are operationally profitable. But not everybody can hope to make a success out of tea in international markets. The entrepreneurs that are doing well have significant experience in the space. Dugar's father was a major tea estate machinery supplier and grew up in Siliguri. Mittal worked with Hindustan Unilever's tea division for 30 years. Vahdam's Sarda has tea businesses in Darjeeling and Gangtok (Sikkim).